The subscription-based business concept – already popular in other industries through the likes of Netflix, Amazon and Spotify – is looming on the travel horizon, a trend that industry experts said will be accelerated by seismic forces of the Covid-19 pandemic and mass digitalisation.
At this week’s virtual HICAP conference, the prospects of the subscription model gaining traction in the travel industry were raised during a panel on ‘Where are we heading?’.
Pan Pacific Hotels Group (PPHG) CEO Choe Peng Sum is excited about the prospects of subscription business as he believes that hotels have not fully tapped on the subscription model.
The pandemic has elevated how travellers place even more premium on value and want a sense of belonging, he told the online audience, citing how co-working giant WeWork has successfully built a global community by allowing members to work from its locations worldwide.
Choe views the subscription model as a natural evolution of loyalty building for hotels, which initially started as a recognition programme, turned into a reward programme, and subscription is likely to be the next step with the growing emphasis of a community. “You travel to all the places where the hotel [chain] has properties. You feel that you belong. It’s just like Netflix – where you go, you turn it on.”
As such, the hotel chief believes the subscription model could potentially bring “a new wave” for the hospitality sector and enable PPHG “to build up a community” through its portfolio of hotels and restaurants.
“People want value, value add and they want to belong,” he stressed. “The Netflix culture is coming up and we might not be able to ignore it. We can build community through subscriptions.”
And in the changed environment caused by Covid-19, Sanghamitra Bose, general manager Singapore, Hong Kong, Thailand of American Express Global Business Travel, also believes that the subscription model “is coming” to travel management business.
“In the past, TMCs were very transaction-dependent. You book a ticket, you pay a fee. Now in this changed environment, we see a lot of the requirements for services that are non-transactional – such as up-to-date information, pre- and post-travel requirements, fares with flexibility and huge need for duty of care for disruption management.”
For services which are non-transactional, Bose thinks that they could move into a subscription or a SaaS model. “That’s where I see the future.”
But Campbell Wilson, CEO of Scoot, was decidedly less upbeat about the subscription model, giving it a “thumbs down” when WebinTravel’s founder and editor Yeoh Siew Hoon asked if he expected the concept to make significant inroads into the airline industry during the panel discussion.
Attempts by airlines to build a subscription model have largely failed, he noted, as such moves were to either target a limited niche market or for a cash-grab liquidity purpose. The fundamental challenge of selling “a perishable product” is still not addressed through the subscription model, Wilson added.